A Metaverse Winner & a Tech Icon (GOOGL)
History of Google and Alphabet
GOOGL has a Silicon Valley fairytale beginning. Two relatively unfocused Stanford University graduate students in the Department of Computer Science, Larry Page and Sergey Brin, were searching for dissertation topics and decided to investigate the “mathematical properties” of the World Wide Web – a somewhat unspecific focus.
Their interests focused on determining the number of backlinks and the nature of these back links that went to a given website and then assigning a relative importance to that website. This is similar to the way that the journal articles written by scientists are ranked by number and quality of citations.
Larry Page and Sergey Brin as graduate students at Stanford University. (Source: wired.com)
It’s pretty easy to see where this is going. Their research naturally gave way to a better internet search engine than anything that existed at the time, and so Google was spun-out from their graduate research studies. The company launched in 1996. All graduate students should be so lucky to have their graduate studies turn into multi-billion-dollar opportunities!
Google has been the dominant way of searching the internet ever since and very likely will remain so into the far future. In reality, Google has what Peter Thiel called in his book, “Zero to One,” a monopoly.
With this monopoly, GOOGL has put its resources to good, almost philanthropic, uses benefiting the everyman. They bought Keyhole Inc. in 2004, which eventually became Google Earth and offered it free of charge. Google has also offered other crucially useful programs free of charge such as word processors, spreadsheets, slide show presentation programs, email browsers, calendar programs, etc. In-fact, Google offers what is essentially all of Microsoft’s Office Suite for free.
In 2012, GOOGL CEO, Eric Schmidt, decided to turn it into a holding company. The parent company became the newly invented Alphabet Inc., and Google became one of many companies held within it. Other companies of note held within the holding company are autonomous vehicle developer Waymo and venture capital firm GV.
Alphabet / Google headquarters in Mountain View, California. (Source: corporateofficeheadquarters.org)
Latest Happenings at Alphabet
Alphabet has made several acquisitions since our last status report. Based on what it has been purchasing, it appears to be focused on developing the Metaverse. It has purchased companies that are developing key components that will make the Metaverse a reality. As I’ve described in previous articles, the Metaverse will be similar to the internet, but much more immersive. Participants will wear special goggles that help you feel like you’re standing in an alternate reality.
Besides ever more realistic video games, Metaverse developers envision a variety of novel uses. For example, interactive museums where you can interact with exhibits. Another interesting example will be epic (Meta-) public concerts where well-known bands play virtual instruments and sing within the Metaverse. There’s plans for special parts of the Metaverse that can improve a surgeon’s ability to operate on needy patients with remote oversight or virtual courses in virtual reality (VR).
In March, GOOGL purchased Fremont, California-based Raxium for $1 billion. This innovative company is revolutionizing micro-displays in augmented reality (AR) goggles with micro-light emitting diodes (mLEDs). Its displays are smaller, higher resolution, and more energy efficient than such devices have ever been before.
Raxium has moved the needle on micro-LEDs for AR goggles. (Source: techlog360.com)
In April, through its Intrinsic subsidiary, GOOGL purchased Vicarious for an undisclosed amount. Vicarious develops artificial intelligence (AI) used to make robots more intelligent and useful. Right now, AI robotic software developed by Vicarious is used to pack complicated, multicomponent products into complicated boxes and wrapping. However, its software will likely become relevant for a variety of other applications.
Also in April, Alphabet purchased edge computing pioneer and leader MobiledgeX. Edge computing is an architecture that brings cloud storage geographically closer to computation power. So, it’s a location specific strategy, meaning computers in the cloud need to be physically close to the computers generating data. The advantages are faster speeds and greater bandwidth. Alphabet will benefit from this acquisition because it brings greater speed and efficiency to their future Metaverse.
Alphabet’s Market Performance
Here’s a piece of really good news for the average investor – Alphabet had a 20 for 1 stock split on July 18. This means that rather than paying around $2,000 per share, now you can have a piece of Alphabet for around $100. That doesn’t change the market value of the stock. It just makes it easier for individual investors to afford. Plus, it creates more shares for investors to buy and trade.
It also helps if GOOGL initiates a stock buyback plan to reduce outstanding shares and increase market value. It announced a $70 billion stock buyback program in late April.
At this point, as a tech stock icon, it has been under pressure in the current market. As you can see from the chart above, GOOGL is down by about 27% from its peak in October 2021, but given its massive run, it’s just a blip in the overall trajectory of this juggernaut. While the stock price has sunk with the general market, it’s clearly now selling at a significant discount, and you might want to think about buying more or establishing a position in this true MegaTrend stock.
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